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Show For example, the Director of the Bureau of the Budget, in a letter to the Secretary of the Interior of July 17, 1950, on the Palisades (Idaho) Project, said: The repayment plan proposed in the report contemplates the use of the entire amount of the interest component of the commercial power revenues for aiding repayment of irri- gation costs. The President has neither ap- proved nor disapproved such action from the standpoint of national policy. Furthermore, while it is recognized that the Solicitor of the Department of the Interior has issued an opinion that the interest component on the power investment could be so applied, the President has not indicated agreement that the present law should be so interpreted * * * . The use of the interest component of power rev- enues in assistance to irrigation rather than its re- turn to the Federal Treasury as a recovery of power costs is a direct contribution from the general tax- payer to irrigation repayment. Statements to the effect that irrigation costs will be repaid from these power revenues give the erroneous impression that such contributions are less costly than repayment from general funds. Plans for the entire basin de- velopment for power and for irrigation have not been prepared to the extent of permitting con- clusions to be drawn either as to the total Federal contribution that will be required or as to the effect of such contribution from power revenues upon power rates. However, data are available for the important Central Arizona Project. Cost of this, project, based upon price levels prevailing in July 1947, would be 738 million dollars, to be allocated among the several project functions under interpretation of policies then accepted, as follows: Power________________ $248,964,000 Irrigation_______________ 399,424, 000 Municipal supply________ 16,922,000 Flood control___________ 6, 188, 000 Sediment control_________. 26, 223, 000 Recreation______________ 32, 943, 000 Fish and wildlife_________ 2, 758, 000 Salinity control_________ 4, 986, 000 Total_____________738, 408, 000 A large part of the nearly 400-million-dollar irrigation cost would be assigned to repayment from the interest component. Capital costs allocated to irrigation would be repaid from:18 Percent Irrigation revenues_______________ 2. 5 Municipal water revenues------------- . 6 Interest component on commercial power________________________87. 3 Net power revenues other than interest_______________________ 9. 6 The Bureau of Reclamation has estimated that rates of 4.82 mills per kilowatt-hour at load cen- ters for commercial energy, and of 15 cents per thousand gallons for municipal water, together with other project revenues, would amortize all reimbursable project costs over a 78-year period.19 According to the Federal Power Commission the 4.82-mill rate is 0.72 mill, or 17.5 percent higher than it would have to be if irrigation costs were not paid from the interest component on power reve- nues.20 Of the total capital costs repayable from power revenues, about 60 percent are costs of irri- gation facilities. Professional opinions differ on the actual effects of irrigation subsidy on the proposed power rates, and on the salability of energy at the proposed rates.21 Conclusions (1) Pooled accounts.-Authorizing legislation should permit costs and revenues of existing and contemplated Federal hydroelectric projects in the Colorado River Basin to be combined into the number of pooled accounts for rate making and administrative purposes that investigation shows to be desirable from the standpoint of efficiency and public interest. These should be along the lines of the multiple-purpose basin accounts recommended by this Commission. (2) Interest component.-The use of the in- terest component of power revenues for repayment M U. S. Congress, Senate Committee on Interior and Insular Affairs. Central Arizona Project and Colorado River Water Rights. Hearings. * * * 81st Cong., 1st sess. on S. 75 and S. J. Res. 4. Washington, Govern- ment Printing Office, 1949, p. 922. 18 Doc. No. 136, 81st Cong., 1st sess., 1949, pp. 185-187. Another Bureau of Reclamation estimate differs some- what in detail. See U. S. Congress, Senate Committee on Interior and Insular Affairs, op. cit., for an estimate of a 4.65-mill rate and a 70-year pay-out period. 80 Id, p. 108. M According to one estimate, 1.83 mills, or 38 percent of the 4.82-mill proposed rate would be for irrigation re- payment. See U. S. Congress, Senate Committee on Interior and Insular Affairs, op. cit., p. 458. 399 |